Global shipping agrees on hybrid emissions levy model

Source: The post Global shipping agrees on hybrid emissions levy model has been created, based on the article “How is shipping industry tackling emissions?” published in “The Hindu” on 13 May 2025. Global shipping agrees on hybrid emissions levy model

UPSC Syllabus Topic: GS Paper3- Environment

Context: The International Maritime Organization (IMO), through its Marine Environment Protection Committee (MEPC-83), deliberated on a Market-Based Measure (MBM) to reduce greenhouse gas emissions in shipping. The session concluded with the adoption of a hybrid emissions levy model amid significant geopolitical and economic divisions.

Deliberations and Proposals at MEPC-83

1. Diverse Approaches to Emissions Levy
   Five proposals were presented:

• The International Chamber of Shipping suggested a fixed levy per tonne of CO₂ emitted.
• China proposed a compliance unit trading model encouraging investment in alternative fuels.
• The EU backed a fixed GHG levy, administered by an IMO fund.
• India advocated a ‘bridging mechanism’ penalising under-compliant ships and rewarding those using zero or near-zero fuels.
• Singapore proposed a tiered GHG Fuel Standard (GFS) based on India’s idea, adding mechanisms for surplus and remedial units.

2. Geopolitical Influence and Tensions: The U.S., under Trump, distanced itself from climate goals and threatened “reciprocal measures” if the EU-backed plan passed. Political divisions hindered open consensus.
3. Outcome of the Vote: The committee accepted Singapore’s hybrid model, inspired by India’s framework, by 63 votes to 16. However, the model requires amendment of Annex VI of the MARPOL convention and a two-thirds majority for final adoption. One-third of members with 50% of shipping tonnage can still block it.

Conflicting National Interests and Equity Challenges

1. Opposition from Fossil Fuel Exporters: Saudi Arabia and others strongly resisted any meaningful shift toward green fuels. Their focus was on protecting fossil fuel markets rather than climate commitments.
2. Divergent Demands from Developing Nations: Small island states and least developed countries pushed for steep carbon levies. Their aim was to redirect revenues toward green development, viewing shipping emissions as a threat to their survival.
3. Pressure to Preserve Market Competitiveness: China and other large shipping nations lobbied for minimal levies, prioritising affordability and competitiveness. Meanwhile, Norway and other Scandinavian countries sought credit for early investments in decarbonisation through surplus credit systems.
4. Unfair Burden on Developing Countries: A key concern raised during deliberations was the erosion of the principle of “common but differentiated responsibilities and respective capabilities” (CBDR-RC), enshrined in the UNFCCC and Paris Agreement. While this principle acknowledges historical responsibility and unequal capabilities, developed countries increasingly pushed for equal compliance, shifting disproportionate burdens onto the developing world.
5. Scepticism from Traditional Maritime Powers: Shipowners from Greece and similar nations expressed doubt about the feasibility and need for a carbon levy. Others, lacking viable green technologies, requested delayed timelines for implementation.

Significance of Green Shipping

1. Scale of Emissions: Shipping emits nearly 1 billion metric tonnes of GHG annually — 2.8% of global emissions. If classified as a country, it would be the sixth-largest emitter globally.
2. IMO’s Evolving Measures: Since 2011, IMO has introduced standards including the Energy Efficiency Design Index, Ship Energy Efficiency Management Plan, and mandatory fuel consumption reporting.
3. Targets and Principles: IMO aims to reduce carbon intensity by 40% by 2030, 70% by 2040, and achieve net-zero by 2050. These targets align with the UN SDGs and Paris Agreement and are more concrete than aviation goals.

India’s Strategic Advantage

1. Limited Immediate Impact: India’s international fleet is small, and domestic ships are exempt. The expected cost impact is modest until 2030.
2. Potential as a Green Export Hub: India’s green hydrogen initiative meets IMO’s reward thresholds. With major industry and port investment, India could become a global leader in green fuel exports.

Conclusion

The IMO’s adoption of a binding carbon levy framework marks a transformative moment for global shipping. If successfully implemented, it could become the first international sector to operate under enforceable climate goals, setting a precedent for other industries.

Question for practice:

Discuss how geopolitical and economic interests influenced the adoption of the hybrid emissions levy at MEPC-83.